Chapter X - Agency
Section 220
Section 220: Remuneration for misconducted work
An agent forfeits remuneration for the part of agency business that the agent misconducted.
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This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
An agent who is guilty of misconduct in the business of the agency, is not entitled to any remuneration in respect of that part of the business which he has misconducted.
Illustrations
(a) A employs B to recover, 1,00,000 rupees from C, and to lay it out on good security. B recovers the 1,00,000 rupees; and lays out 90,000 rupees on good security, but lays out 10,000 rupees on security which he ought to have known to be bad, whereby A loses 2,000 rupees. B is entitled to remuneration for recovering the 1,00,000 rupees and for investing the 90,000 rupees. He is not entitled to any remuneration for investing the 10,000 rupees, and he must make good the 2,000 rupees to B.
(b)A employs B to recover 1,000 rupees from C. Through B’s misconduct the money is not recovered. B is entitled to no remuneration for his services, and must make good the loss.
Rule and business relevance
The section ties the fee consequence to the affected part of the business. The illustrations distinguish properly performed recovery and investment work from misconducted investment.
Limits and related provisions
Do not automatically forfeit every fee for unrelated work or ignore a separate duty to compensate loss. Identify the misconducted part and causal loss.
Hypothetical business example
Hypothetical example: An agent properly collects money but misconducts one part of its investment. Fee entitlement is separated by the work performed, and the resulting loss is addressed.
Practical decision flow
Identify the misconduct and the part of business affected.
Separate remuneration for properly performed work.
Assess any separate loss-compensation obligation.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Identify the misconduct and the part of business affected.
- Separate remuneration for properly performed work.
- Assess any separate loss-compensation obligation.
Avoid
- Do not automatically forfeit every fee for unrelated work or ignore a separate duty to compensate loss. Identify the misconducted part and causal loss.
Glossary
- Misconducted business
- The part of agency work affected by the agent’s misconduct.
- Fee forfeiture
- Loss of remuneration for that affected part.
Frequently asked questions
Is every unrelated fee automatically lost?
The section refers to the part of the business misconducted.
Can compensation also be due?
The illustrations address making good loss as well as remuneration consequences.
Why split the tasks?
The statutory example distinguishes proper work from the misconducted part.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026